QuoteReplyTopic: Salary for foreign worker in the UAE Posted: 01 December 2015 at 2:30am

The UAE economy is a transitional economy that attempts to diversify away from hydrocarbon-based to non-hydrocarbon-based economic growth. One of the main constraints during the transition is the scarcity of skilled knowledge workers from the local population while there is abundant supply of imported mostly unskilled foreign workers.

In the UAE, it is estimated that there are more than 4 million foreign laborers that work in around 260,000 private establishments. The large influx of foreign workers can be attributed to many factors, among them the high economic growth which is financed by the increasing oil revenue since the early seventies and which has led to excess demand for labor that cannot be met by domestic workers. However, over the years, this economic growth continues to rely largely in the non-oil sector on cheap foreign workers who have low reservation wages and coming especially from Asian countries which have excess supply of labor.

The overall average annual administrative and recruitment costs per worker are estimated at around 2.674 AED in general, and at 3,404 AED for skilled workers and 2,296 AED for unskilled workers. Wages and cash and non-cash benefits are estimated at around 41,000 AED annually per workers in general. This cost for a skilled worker is close to 7 times that for an unskilled worker (129,302 AED to 18,925 AED annually). The overall social cost, which is assumed to be the same across sill levels, is estimated around 14,066 AED per foreigner. However, a across skill levels, is estimated around 14,066 AED per foreigner. However, a foreigner pays around 2,507 AED annually in various fees to government departments on average. Therefore, the average annual social cost per foreigner can be estimated at around 11,559 AED after accounting for fees paid to the government. Overall, the total annual cost of labor is estimated at around 55,000 AED in general, and around 144,000 AED for a skilled worker and 33,000 AED for an unskilled worker.

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